Google has good reason to seek re-entry into China market, but should it compromise on its principles? This is the question being raised by observers amid reports that the internet giant is preparing a censored version of its search engine. Pic: Reuters

Is Google going too far to re-enter China?

Despite the various problems in the market, China is not something that overseas technology firms can afford to ignore or let go. Given the sheer size of the country and its nearly 1.4-billion-strong population, even giant global corporations are ready to be extra-flexible and bow to the diktats of Chinese authorities just to get a chance to operate within the market.

We’ve seen Apple, for instance, compromise on its principles and agree to transfer its Chinese users’ iCloud accounts to a Chinese data center, a move that could enable mainland government or law enforcement officials to access the data. In another case, social media giant Facebook, which has been banned in China, is believed to be actively exploring ways to get back into the country, even if it means bending to content censorship rules.

Right now, it’s Google’s turn under such spotlight as the internet behemoth appears to be doing all it can to return to the China market after exiting it eight years ago due to censorship restrictions.

In 2010, Google shut down its Chinese search engine, saying it deems Beijing’s content filtering directives unacceptable. Rather than do business in a dirty way, the firm moved its Chinese traffic to an uncensored Hong Kong version of the search engine. That led to the platform being effectively shut out for most Chinese users.

Getting blocked from the huge market naturally had adverse implications for Google’s revenues in this region, prompting the company to rethink its options.

Now the company seems to have made up its mind that it should put business interests above all else, and that it should try to make a comeback to China.

Having missed out on the China market for eight years, Google is now said to be readying a filtered search engine specifically for that market.

Media reports suggest the firm has already shown a new Chinese search app to mainland officials. According to US online publication The Intercept, which first revealed the effort last week, a finalized version could be launched in the next six to nine months, subject to Beijing’s approval.

If that really happens, it would represent a stunning U-turn for Google which had in the past railed against state-sponsored Chinese censorship.

The company will face questions from human rights advocates and US politicians, as well as from its own employees, as to whether it is sacrificing its principles for business gains.

Google must have surely weighed the potential blowback, but still decided in the end that the benefits will outweigh the risks, given what is at stake.

Interestingly, Chinese state media have softened their tone against Google in recent days, suggesting a breakthrough of sorts could indeed be on the way.

On Monday, People’s Daily posted a commentary on its Twitter and Facebook accounts saying Beijing would welcome Google’s return to China as long as it complies with the relevant laws.

The US tech giant’s earlier decision to exit the China market has been a “huge blunder” that resulted in the firm “missing golden chances in [China's] internet development,” the commentary said.

“Google is welcome to return to the mainland, but it’s a prerequisite that it must comply with the requirements of the law,” it said.

There is no escaping the fact that all foreign firms must follow Chinese laws if they want to operate in the country. Though it may seem unpalatable, Google has no option but to swallow its pride and bow to Beijing’s strict content regulations if it wants to get its foot back in the door.

Hence, the plans for a censorship-friendly search service that will filter out material deemed harmful to the interests of the mainland authorities.

As Google awaits regulatory approval of its filtered search engine app, the company is, meanwhile, reported to be in talks with Tencent and some other Chinese firms for cloud services partnership.

Cloud, which has emerged as a key growth engine for Google on top of the core search advertising, can help promote stickiness of enterprise users to Google services, encouraging them to utilize the firm’s full services — including search engine marketing, Google’s advertising network, and analytics tools — to help them grow their online business.

Still, the main China focus will be in relation to the Android operating system. While Android is an open source software which enables smartphone makers to use it without paying for it, the fact is that Google charges them if they want to include Google’s service in the smartphones. Companies are required to pre-install four selected apps on the phone — Google search, Chrome, YouTube and Gmail.

Now, as Google is banned from China market, Android smartphones selling in the country do not provide Google services, resulting in a situation where users need to “jailbreak” the phone to get access to Google Play store to download all the Google and other apps.

Such activity means Google doesn’t get any payment from the apps installed on Chinese phones. Given that Android smartphones account for more than 80 percent market share in China, Google has been missing out on huge revenues in the past eight years.

During Google’s absence over the past eight years, the internet landscape in China has changed rapidly. The number of mobile internet users has more than doubled in the country, rising from 303 million in 2010 to an estimated 753 million today.

Last year, Chinese smartphone users spent nearly US$35 billion on apps, according to data from App Annie. But only Apple and Chinese companies like Tencent and Baidu benefited from that, leaving Google out in the cold.

From a business perspective, it is easy to understand why Google wants to return to China. The internet giant would like to capture the money that it has been losing from the Google Play Store in the past eight years.

Still, the question remains: Is it going too far in trying to appease Beijing officials as it seeks to win China revenues?

It can be argued that Google could have complied with Chinese laws in terms of the items hosted on the Play Store, without making the country initiative too political by jumping into a self-censored search engine.

Whatever the business compulsions, the filtered Chinese app will do no good for Google’s image and for the broader cause of global internet freedom.

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